ITS A NEW WORLD AND THERE'S NEW OPPORTUNITIES
Today marks the seventh week since Australians have had to live under the strict social distancing measures designed to contain the spread of the Coronavirus. Despite the seemingly short period, the economic toll has been tremendous, with the Federal and State governments having spent approximately $245 billion (12.5% of GDP) to support businesses and households through the COVID-19 shutdown.
But that is not the end: Leading economists in the country now predict a strong prospect for a deep recession, whereby a more prolonged and severe economic downturn than previously anticipated, accompanied by double digit unemployment are expected to hit us in the coming months.
As the value of loans deferred due to the impact of the coronavirus crisis rises to more than $200 billion.
The 60 companies that presented at the Macquarie Australia conference the largest annual gathering of companies and institutional investors on the Australian calendar. last week were determined to show their resilience but huge economic dislocation is coming. There is a decent chance it will take many years before Australian business activity recovers to pre-pandemic levels, according to Macquarie Group executives.
So why the sudden optimism amongst stock markets around the world?
With no vaccines or treatments for Covid19 in the near horizon, and worldwide active cases in excess of 3 million and still rising daily, living with the virus under some forms of social distancing restrictions appears to be the way forward for countries around the world.
Its a shift by large institutional funds withdrawing their capital by realising losses from high yield (Banks), low growth (Negative capital growth stocks), playing defensives, mixed in with a huge volume of retail self directed investors hitting the stock market with what we can only suspect is there savings for a property or overseas holiday. An average of 4,675 new unique client identifiers [new client accounts] appeared per day during a focus period 24 February to 3 April. This made up a total of 140,241 "new investor accounts" we had previously not observed,” ASIC reported. Once the price swings on mid-caps and even trading floors being swamped with business commented to groups. And the truth is, Retail investors chasing quick profits by playing the market over the short term have traditionally performed poorly – in good times and bad – even in relatively stable, less volatile environments, the punters aren't helping themselves.
So where is the value? Banks, Retail property trusts are viewed amongst some of the smartest money in the world as dying in breed, whilst our firm wide view had been follow the APTs, look at the way people are moving money, Forex.com and find the tends that are pulling society, Digital banking NOT digital currency. A large focus on EV (Electronic Vehicles) and the metals they require excusing cobalt, OVER PRICED sector.
So how do you grow & preserve capital in the economy of 2020?